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General Assembly Raised Bill No. 1143
January Session, 2019
LCO No. 7332
Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT ESTABLISHING A PAYROLL TAX.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective from passage) (a) As used in this section: 1
(1) "Employer" means an employer required to deduct and withhold 2
tax from wages pursuant to section 12-705 of the general statutes; 3
(2) "Payroll expense" means (A) wages, as defined in Section 3121 of 4
the Internal Revenue Code of 1986, or any subsequent corresponding 5
internal revenue code of the United States, as amended from time to 6
time, without regard to Section 3121(a)(1) of said code, and (B) 7
compensation, as defined in Section 3231 of said code, without regard 8
to Section 3231(e)(2)(A)(i) of said code, that are paid to all covered 9
employees; and 10
(3) "Covered employee" means an employee of an employer who is 11
required to have amounts withheld from wages pursuant to section 12-12
705 of the general statutes and receives an annual gross income from 13
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wages and compensation of more than forty thousand dollars. 14
(b) (1) On and after January 1, 2020, each employer shall pay a tax 15
on such employer's payroll expense at the following rates, provided 16
such employer shall be subject to the tax imposed under this section 17
only on the payroll expense in excess of forty thousand dollars paid to 18
any covered employee during a taxable year: (A) For the taxable year 19
commencing January 1, 2020, one and one-half per cent of such 20
employer's payroll expense during the quarter; (B) for the taxable year 21
commencing January 1, 2021, three per cent of such employer's payroll 22
expense during the quarter; and (C) for the taxable year commencing 23
January 1, 2022, and for each taxable year thereafter, five per cent of 24
such employer's payroll expense during the quarter. 25
(2) An employer may not deduct from the wages or compensation 26
of a covered employee any amount that represents all or any portion of 27
the tax imposed on such employer pursuant to this section. 28
(c) Each employer shall pay the tax imposed under this section to 29
the Commissioner of Revenue Services at the same time and in the 30
same manner such employer would be required to pay the tax under 31
section 12-705 of the general statutes, and shall file a return in such 32
form and manner as the commissioner prescribes. Any individual who 33
is under a duty to act on behalf of an employer to comply with the 34
provisions of this section shall be jointly and severally liable with the 35
employer for any tax, penalty or interest owed under this section. 36
(d) All provisions of chapter 229 of the general statutes shall apply 37
to the provisions of this section in the same manner and with the same 38
force and effect as if the language of said chapter had been 39
incorporated in full into this section and had expressly referred to the 40
tax imposed under this section, except to the extent that any such 41
provision is inconsistent with a provision of this section. 42
Sec. 2. (NEW) (Effective from passage) (a) For taxable years 43
commencing on or after January 1, 2020, there shall be allowed a credit 44
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against the personal income tax imposed under chapter 229 of the 45
general statutes for covered employees of an employer, as those terms 46
are defined in subsection (a) of section 1 of this act. Such credit shall be 47
in the following amounts: 48
(1) For the taxable year commencing January 1, 2020, the credit shall 49
be in an amount equal to (A) the covered employee's wages and 50
compensation in excess of forty thousand dollars received by such 51
employee during the taxable year from the employer, multiplied by 52
the product of (B) (i) one and one-half per cent, and (ii) the result of 53
one minus a fraction, the numerator of which shall be the tax imposed 54
on such employee pursuant to chapter 229 of the general statutes prior 55
to the application of any credits for the taxable year and the 56
denominator of which shall be such employee's taxable income as 57
determined pursuant to said chapter for the taxable year; 58
(2) For the taxable year commencing January 1, 2021, the credit shall 59
be in an amount equal to (A) the covered employee's wages and 60
compensation in excess of forty thousand dollars received by such 61
employee during the taxable year from the employer, multiplied by 62
the product of (B) (i) three per cent, and (ii) the result of one minus a 63
fraction, the numerator of which shall be the tax imposed on such 64
employee pursuant to chapter 229 of the general statutes prior to the 65
application of any credits for the taxable year and the denominator of 66
which shall be such employee's taxable income as determined 67
pursuant to said chapter for the taxable year; and 68
(3) For the taxable year commencing January 1, 2022, and each 69
taxable year thereafter, the credit shall be in an amount equal to (A) the 70
covered employee's wages and compensation in excess of forty 71
thousand dollars received by such employee during the taxable year 72
from the employer, multiplied by the product of (B) (i) five per cent, 73
and (ii) the result of one minus a fraction, the numerator of which shall 74
be the tax imposed on such employee pursuant to chapter 229 of the 75
general statutes prior to the application of any credits for the taxable 76
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year and the denominator of which shall be such employee's taxable 77
income as determined pursuant to said chapter for the taxable year. 78
(b) If the amount of the credit allowed pursuant to subsection (a) of 79
this section exceeds the covered employee's liability for the tax 80
imposed under chapter 229 of the general statutes, the excess may be 81
carried forward to the immediately succeeding taxable year or years. 82
This act shall take effect as follows and shall amend the following
sections:
Section 1 from passage New section
Sec. 2 from passage New section
Statement of Purpose:
To establish an employer compensation expense tax.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline,
except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is
not underlined.]